Need help with this property

You have to know other info also.

What are the comparables?
How much on rehab?
What are the rents?
When do the leases expire?
What is your exit plan?
Will the seller finance or negotiate terms?

What area of the country are you in?

Not to be discouraging, but If you are brand new it is much easier to start with single family homes. Much less difficult. But I applaud you for jumping in.

Thanks, but that's why I'm reaching for help; how do I get those information? I have not gone beyond looking for realtors in the rockbottom program. I need guidance.

Considered Multi-family. So, what you need are financials for the lasst 2 years, everything that Karen said, and whatnot. I understand the way you evaluate cashflow deals like this is different than you would a normal house, because you're looking at numbers ~ Ca$hflow basically. This includes Cap Rate, Cash on Cash, ROI, etc.

At 1st glance this is a fairly good deal. Seeing the net will payoff the deal in 8 yrs. (Better deal if 6yrs)

Negotiate price and see if owner will finance.(even short term 2-5yrs)

Get All info above Kareng mentioned

Research the property.How much he paid, taxes,how long he's owned it

What repairs have been done, and whaich will be needed in near future?

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Hi, Ownyourhome

There is a good link on DG Family Member's Name Mark K.
He has organized a set of great points to follow done by Dean via video that can help you on your quest about this deal.
Here is the link but if it does not work do a search in the DG website. It will guide you steps by steps on how to handle the deal = your business.

http://www.deangraziosi.com/real-estate-forums/everything-else/86517/30-...

Congratulations,
Wening
(fort Lee, NJ)

you don't have to have a realtor. you can go through the listing agent. right now your goal is just to gather the facts.
Call the # on the listing.
Just state your name and that you are calling about the property listing at xyz, anywhere, state
Ask if he/she is the listing agent (just to confirm your not speaking to the wrong person)
Assuming they say yes. You say great, I am not a broker, I am principal. Right now you are the only agent involved. I'm interested in the property but I have a few quetions. Do you have a second "Steve" to answer a few questions?
He says yes, you proceed with your questions.
also ask him "what can you tell me about the property" then let him talk. (he can reveal info that can help in creating the deal)
ask what is the current gross income? what is the current expenses?
(confirm the NOI)
$400k asking price. who and how was this determined?
etc.

note: even though it is 4 units. If it is a duplex detached dwelling. It it still residential will be analysed to that of a a SFR. Meaning you'll determine value based on comps. price per unit
I'd also looking at current market cap (ask agent what's the current market cap)
NOI/cap (based on this assessment you can run it past the 1% rule. 1% of purchase price to equal monthly income to be at a break even point)

find out the mix (# bed/bth) I stay away from 1/1 because your market it to limited.
@ $50k NOI you're looking at approx $1k each unit monthly. at a current asking price of $100k per unit. (NOTE: confirm the $50k is NOI and not effective gross). because based on cashflow per unit, I'd be inclined to think they owned if free and clear OR very low debt servicing) which could turn the whole thing around for you. Because if $1k is NOI per unit they are going to have to be renting it in the upside of $1500+- per unit to cover expenses in most cases if low/no debt servicing(depending on area exp will vary of course) then determine if it's compatible with the current market rents.
identify if/any deferred maint. what are your cap. improvemnet/rehab #'s?

NOTE: another quick way to determine a potential deal from a dud is simply add a 0 to your NOI to give you an anticiapted "as is" value. if that's the case it would put it in the range of $500k as is value. (meaning at current list price you are at 80% LTV) with at $100k equity at close
UNLESS you have a buyer that buys strickly on cashflow the LTV isn't really a wholesale deal.

make sense?

I'll be glad to provide more detail action steps. But right now it depends on what you're planning to do with the property?

Totally different ballgame if the seller is motivated and willing to entertain creative terms and how 'sweet' you can negotiate the deal.
with being 100% occupied, doesn't leave a potential upside or many profit centers.

as it stands at first looks appears close to retail. just because it 'appears' retail doesn't mean you can't negotiate it into meeting your acquisition criteria. It's on a line that it COULD go either way. But you've got to call and find the motivation.

whether it is a deal of a dud. call anyway, it will be a GREAT learning experience!!
go through it (# wise) to get a understanding

let me know if I can assist in any way.

blessing,
Jen

Thanks Jen, I have enough to work on today. I will keep you posted. thanks again.

Thanks Mike.

Nice breakdown, Jen!

I must admit that I get frozen up when I say properties by a Realtor.

I got this feeling whenever I see property on Craigslist, Realtor.com, etc. I very much like to pursue the property but the thought of having a realtor asking for POF makes me nervous.

I know this has been discussed extensively on DG and the sources of POF but for some reasons, I still feel uncomfortable. I feel uncomfortable because of my bank account.

However, I would like to know how to proceed. I have talked with a lot of private owners and I felt comfortable in this mode. I believe the more you talk, the more comfortable you are talking with someone. But I would like to get over this fear of talking with realtors.

I do a lot of advertising, on Craigslist, Letter to property owners, signs, flyers and I get a number of prospects. I believe I can do better if I am able to get over this fear of talking to realtors.

Any Suggestions?

The only way to get over the fear is just take a deep breath and start dialing. I wish there was a magic answer but that is it!

So what if you stumble once or twice? What is the worst that can happen? Ask yourself that and when you answer that question you will realize there is not really a reason to be afraid.

Good luck!

Karen

Matthew,

I understand where you are coming from, believe me! I remember starting out, literally getting sick (physically) before making a call. I'd work it up so much in my mind, I'd literally throw up. (I know gross, but it's true).
How did I overcome it? Well I'll give you a couple of suggestions that helped me and maybe you will find a something that will help you.

I used this technique not only with properties but banks, professionals, etc. I would pick a city (anywhere) that I have absolutely no interest in pursuing and start making calls. I'd set a goal to call 10 people in that area for one purpose....PRACTICE. If I screwed it up, who cares. I had no interest there anyway. By doing so, it got me used to making calls, asking questions, comfortable being on the phone.

Secondly, NO ONE can make up feel inferior without your permission. But YOU have to have a strong belief and view of yourself. Work on YOU everyday. Read books like Think and Grow Rich, Three Feet From Gold, No Excuses, Flight Plan, Master Key to Riches, Power Of A Positive Mental Attitude, etc. This will help to change the image that you are somehow less qualified because of your current circumstances (bank account as you said). Doesn't matter where you are, it only matters where you are going.

As far a POF kind of varies whether it's just a residential or whether you are dealing with a commercial broker. Completely different techniques because completely different group of people. You have to understand the realtors perspective also. They are sales people. They are looking for the sale. They don't want to waste their time. They want to know you are a player in the real estate world. Can't blame them for that. If you wholesale, you do the SAME thing with your buyers. You want to know that they can perform. Because everyone and their mother is a "investor" these days. lol

If you are having a realtor grill you like a onion, couple things I'd suggest. Use the result to a higher authority approach, tell them "you work with a firm that purchases property nationally. You are just the front guy. Right now you are just on a fact finding mission to determine if this is a property that your team may be interested in." (THEN resort straight to a questions) "So, in your professional opinion what would we be looking at as far a rehab cost on this property?" (or whatever the questions you ask is irrelevant. You are taking control and refocusing his attention.

Another approach I have used, is when they a trying to grill is similar again to the above. When they ask for POF, LOI, etc. kick it back to them. "I work with a firm that acquires properties nationwide, we have both the capital and resources inplace to move quickly on a project. Yes, abolutely no problem. We will provide financials if this is a project we decide to move forward on. Tell me, do you have any more properties that we might be more interested in?" (know the psychology behind this. what did you just do. You answered his questions then told him, this property is o.k. but you got something better?? - lol) Again it's quickly answering his questions and taking control, flipping the ball back into his court. Making HIM be on the answering side of the equations.

Main key here is having the mindset that THEY need YOU more than you need them. I believe action cures fear. Stay in control.

Practice make proficent!

hope this helps,
Jen

Thank you Weining, the link was helpful. I appreciate it.

Someone is going through fourclosure, wants to keep the house but need help. How can we help him? what shall I do?

The options available for that owner will depend upon the details of his circumstances. For example, if he has no equity, no cash, and no way to resume making payments, then he probably won't be able to keep the property. Yet, if he had sufficient equity and the ability to resume making payments, then he'd have some alternatives.

What are the rents and existing financing? If you know those two, you can get a rough idea if noi is in line with expenses. I was talking to a guy about a triplex that looked like a good deal. Then I found out he was factoring in zero for management, vacancy, and maintenance and all of a sudden it didn't look like that good a deal.